Jennifer Tran
Word count: 1,289/PIN: 10454
Corporate Social Responsibility and Social Entrepreneurship in Economic Crisis
Jennifer Tran
For over the 30 years, companies have been encouraged to reduce the footprint they leave on society and the environment. As the years progressed, so did the stringency and quantity of government regulations on companies to focus on minimizing the damage imposed on society. Initially, companies made little effort was made to exceed the regulated minimum. In recent years, there has been a strong drive for corporations to take on greater public responsibilities. Higher expectations are placed on companies to examine how their actions impact the environment. The pressure to find environmentally friendly alternatives or eliminate ecologically damaging practices not only stems from external entities, such as NGOs and the government but from internal sources as well. Employees want to contribute to environmentally beneficial programs and shareholders want to know their money is being used in an effective and benevolent manner. A multitude of businesses are proactively seeking greener initiatives to incorporate into their business strategy while simultaneously maintaining their bottom line.
The major trend towards incorporating philanthropic endeavors into the business culture has encouraged more companies to include corporate social responsibility (CSR) into their business operations. CSR is the concept of businesses proactively considering how their actions affect company shareholders, employees, consumers, communities, and the environment.
By intentionally embedding the public interest into the decision-making
process, companies take on the responsibility of conducting business ethically, while eliminating harmful practices and encouraging development and growth in communities CSRs allows organizations to concentrate on providing a positive impact on an economic, Page 1
Jennifer Tran
social and environment level. In the last ten years, an increasing concern over the earth’s climate change has contributed to the dramatic growth of the CSR industry. An increasing number of large corporations and small businesses are integrating CSRs into their business model.
General Electric’s (GE) ‘Ecomagination’ campaign is a CSR strategy to create
environmentally conscious products. It keeps the public and consumer well informed of its contribution through carefully placed advertisement and an up-to-date website. Starbucks is working to create a more sustainable approach to producing coffee by reducing the company’s environmental footprint. Google’s ‘10th to the 100th’ project is providing $10 million to implement ideas that better society and the environment.
While large companies are able to make a significant change due to their large financial contributions, they are not the only ones making a difference in terms of positive environmental and societal impacts. Just as more companies are incorporating more socially conscious initiatives into their business, more individuals are creating ventures and enterprises to change the world. These social entrepreneurs are utilizing business techniques and entrepreneurial skills to establish and manage ventures that center on social change. They concentrate on constructing organizations, businesses, and/or programs that focus on providing
positive
impact
in
communities
around
the
world.
Although
social
entrepreneurships and businesses committed to CSRs share similar goals, social entrepreneurs concentrate solely on social and environmental goals. They are able to take corporate responsibility to the next level by building self-sustaining businesses that focus on public interest. Social entrepreneurs measure success by how much impact they have on society, unlike companies who view CSRs as a secondary objective and gauge performance through financial analysis of profit and return.
Page 2
Global Initiatives Symposium in Taiwan 2009
The recent financial crisis due to subprime mortgage lending created adverse consequences for banks and financial markets worldwide. The troubles in the banking industry poured into the other major industries including retail, technology, consumer goods, etc. By the end of the 2008, numerous businesses and companies suffered from severe decline in profits and returns.
Companies are now forced to look for effective means of reducing costs and
minimizing unnecessary spending. It seems only logical to decrease the importance of CSRs on the corporate agenda and reduce the amount of funds that are used towards CSR initiatives. In a time of economic downturn, it is no longer lucrative to invest in programs that are not making a significant return on investment. In his article for the New York Times Magazine, Milton Friedman made a valid point in stating that “the social responsibility of business is to increase its profits”. He continues to argue it is not the responsibility of a business to spend money on “general social interest”. The energy spent on CSR distracts from a company’s bottom line.
However, the current crisis provides companies with the opportunity to make changes to their current operations and policies. While it may not be the most advantageous business decision for a company to take on ambitious global initiatives, it can still practice CSR by turning its attention internally and locally. With major incidents like Enron, WorldCom, bank failures and the need for government bailouts that damaged the companies’ reputation, it is important for a company retain its employees and customers. It is the perfect time for a company reexamine its responsibilities to its employees and make improvements to the work culture. If a company is concerned about its public image, it can make contributions locally instead of implementing worldwide initiatives.
Page 3
Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship
Jennifer Tran
The economic crisis also provides businesses with the opportunity to create long-term strategies that look past immediate financial performance or short term gains. A company can take advantage of the economic lull by leveraging the amount of time and resources that can be applied to incorporating CSRs effectively into the business and implementing the solution when the economy improves. With so much concentration on the climate change and its environmental impacts, it is impossible to ignore the need for comprehensive CSR strategies. Even in times of economic decline, maintaining a CSR policy can be beneficial to a company. A company has to consider the type of social outreach it is participating in. It needs to find a solution that is in alignment with the company’s mission and is cost-effective. A competitive advantage can be gained by incorporating a CSR program into a company’s brand and marketing while seamlessly integrating with their business operations. As consumers become increasingly aware of the environmental and social issues, they will look to companies who make it easy for them to “save the planet”.
Many creative solutions to incorporate CSR are possible. As a result of the economic crisis, law firms have given laid-off employees and recent graduates the opportunity to work probono at a reduced salary. When gas prices were soaring, car companies like Toyota and Honda marketed fuel efficient cars and hybrid alternatives to the gas-guzzling sedans and SUVs in the market. Wal-mart installed low-energy LED lighting in its stores and saved millions of dollars while decreasing carbon dioxide production.
Dell decreases carbon
dioxide emissions by using 100% wind energy to power it Oklahoma City campus. Apple creates new Mac mini that reduces energy usage dynamically adjusting power consumption. Instead of creating a new product on its own, a company can build a mutually beneficial relationship with social entrepreneurships while simultaneously adhering to its CSR and making profits.
Social entrepreneur and founder of UniversalGiving, Pamela Hawley,
Page 4
Global Initiatives Symposium in Taiwan 2009
created a program “which helps people give and volunteer with the top-performing projects across the world, and which helps Fortune 500 companies manage their corporate social responsibility programs.�
Despite a financial crisis and decline in economic growth, both companies and social entrepreneurships have the ability and opportunity to include environmentally friendly initiatives at the core of the business. The consumer is always looking for a way to ease ecologically conscious products and actions into their lifestyle. By taking the public interest into consideration when developing a product, re-inventing the supply chain, or improving manufacturing a company can make a deep impact within its industry. It may appear counter intuitive to invest into programs that do not provide immediate gains, but taking on the responsibility of improving the environment and society may provide innovative solutions that become the industry standard.
Page 5
Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship
Jennifer Tran
References Barrett, Douglas. "Corporate Social Responsibility and Quality Management Revisited." Journal for Quality & Participation 31.4 (Jan. 2009): 24-30. MasterFILE Premier. EBSCO. Central Library, Marietta, GA. 3 Apr. 2009 <http://proxygsucob1.galileo.usg.edu/login?url=http://search.ebscohost.com.proxygsucob1.galileo.usg.edu/login.aspx?direct=true&db=f5h&AN=36560654&site=ehostlive>. Brooks, David. "Stimulus For Skeptics :[Op-Ed]. " New York Times [New York, N.Y.] 28 Nov. 2008, Late Edition (East Coast): A.43. ProQuest National Newspapers Core. ProQuest. Central Library, Marietta, GA. 3 Apr. 2009. <http://www.proquest.com/> Nocera, Joe. "TALKING BUSINESS; The Paradoxes Of Businesses As DoGooders." The New York Times 11 Nov. 2006. 3 Apr. 2009 <http://query.nytimes.com/gst/fullpage.html?res=9907E0D71F3FF932A25752C1A96 09C8B63&sec=&spon=&pagewanted=1>. Friedman, Milton. "The Social Responsibility of Business is to Increase its Profits." The New York Times Magazine 13 Sept. 1970. University of Colorado at Boulder. 03 Apr. 2009 <http://www.colorado.edu/studentgroups/libertarians/issues/friedman-socresp-business.html>. Goldsmith, Marshall. "Profile of a Social Entrepreneur." Business Week Online (29 Dec. 2008): 21-21. MasterFILE Premier. EBSCO. Central Library, Marietta, GA. 3 Apr. 2009 <http://proxygsucob1.galileo.usg.edu/login?url=http://search.ebscohost.com.proxygsucob1.galileo.usg.edu/login.aspx?direct=true&db=f5h&AN=35897620&site=ehostlive>. Hanson, Sarah. "Make room for CSR." Director (00123242) 61.11 (June 2008): 6567. MasterFILE Premier. EBSCO. Central Library, Marietta, GA. 3 Apr. 2009 <http://proxygsucob1.galileo.usg.edu/login?url=http://search.ebscohost.com.proxygsucob1.galileo.usg.edu/login.aspx?direct=true&db=f5h&AN=32684385&site=ehostlive>. Heyzer, Noeleen. "Corporate Social Responsibility in the Midst of Financial Turmoil." 7th Asian Forum on Corporate Social Responsibility. Singapore. 13 Nov. 2008. Porritt, Jonathon. Capitalism as if the world matters. Sterling, VA: Earthscan, 2005. Warhurst, Alyson. "The Future of Corporate Philanthropy." Business Week Online 09 Dec. 2008: 16+. MasterFILE Premier. EBSCO. Central Library, Marietta, GA. 3 Apr. 2009 <http://proxygsucob1.galileo.usg.edu/login?url=http://search.ebscohost.com.proxygsucob1.galileo.usg.edu/login.aspx?direct=true&db=f5h&AN=35664799&site=ehostlive>. Page 6
Global Initiatives Symposium in Taiwan 2009
"Just good business." Economist 386.8563 (19 Jan. 2008): 3-6. MasterFILE Premier. EBSCO. Central Library, Marietta, GA. 3 Apr. 2009 <http://proxygsucob1.galileo.usg.edu/login?url=http://search.ebscohost.com.proxygsucob1.galileo.usg.edu/login.aspx?direct=true&db=f5h&AN=28548161&site=ehostlive>. "The next question." Economist 386.8563 (19 Jan. 2008): 8-10. MasterFILE Premier. EBSCO. Central Library, Marietta, GA. 3 Apr. 2009 <http://proxygsucob1.galileo.usg.edu/login?url=http://search.ebscohost.com.proxygsucob1.galileo.usg.edu/login.aspx?direct=true&db=f5h&AN=28548164&site=ehostlive>. "Do it right." Economist 386.8563 (19 Jan. 2008): 22-24. MasterFILE Premier. EBSCO. Central Library, Marietta, GA. 3 Apr. 2009 <http://proxygsucob1.galileo.usg.edu/login?url=http://search.ebscohost.com.proxygsucob1.galileo.usg.edu/login.aspx?direct=true&db=f5h&AN=28548168&site=ehostlive>. "Saving the world." Economist 390.8622 (14 Mar. 2009): 19-19. MasterFILE Premier. EBSCO. Central Library, Marietta, GA. 3 Apr. 2009 <http://proxygsucob1.galileo.usg.edu/login?url=http://search.ebscohost.com.proxygsucob1.galileo.usg.edu/login.aspx?direct=true&db=f5h&AN=36905718&site=ehostlive>. "Corporate Social Responsibility: An Overview." San Diego Business Journal 29.46 (17 Nov. 2008): 7-7. MasterFILE Premier. EBSCO. Central Library, Marietta, GA. 3 Apr. 2009 <http://proxygsucob1.galileo.usg.edu/login?url=http://search.ebscohost.com.proxygsucob1.galileo.usg.edu/login.aspx?direct=true&db=f5h&AN=35693378&site=ehostlive> "Dell - Dell Powers Oklahoma City Campus with 100 Percent Green Energy; Plans to Reduce Global Absolute Greenhouse Gas Emissions Additional 40 Percent By 2015." 03 Apr. 2009 <http://content.dell.com/us/en/corp/d/press-releases/2009-02-24-09Oklahoma-Green-Energy.aspx?c=us&l=en&s=corp&redirect=1>. "Mac mini - Environment - The worldâ&#x20AC;&#x2122;s most energy-efficient desktop computer." Apple. 03 Apr. 2009 <http://www.apple.com/macmini/environment.html>. "New recruits who defer start dates urged to work pro bon." The Law Gazette. 03 Apr. 2009 <http://www.lawgazette.co.uk/news/new-recruits-who-defer-start-datesurged-work-pro-bono>.
Page 7
Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship
Jennifer Tran
Global Initiatives Symposium in Taiwan 2009